Both in the news and the university we always hear about how market participants do short sales on a company stock which they think will go down.
As an example, Temple and Webster was one company I looked at while studying their balance sheet for a Uni accounting assignment in Jan 2022. As it was near impossible to find out their inventory costs (since they are effectively drop-shippers) and they weren't talking about how they would deal with supply disruptions, So I decided to pick another company instead.. I then said to myself "Now TPW would be a good short at $10 considering we have all these supply chain/inflation issues starting to appear". Geez what an opportunity missed!
So that's the idea of finding a target out of the way. But how do you implement?
In basic terms, shorting is finding shares to borrow (usually a broker or investment fund/bank), selling them and buying back the shares at a lower price. Then we hand the shares back to the party that allowed us to borrow them.
But material regarding implementation of shorting is hard to find. Even my uni course only talks about how to calculate the margin but not "where" or "how" to find shares to borrow.
And I've noticed the implementation is hardly discussed here.
From my research, the only way I can think of to implement shorting is to trade CFDs. Or also purchase options (but not all companies have put options available for purchase)
I already opened a IG demo account to see how it works and indeed you can do shorts with CFDs. But the way they display the margin and when you get margin-called is a bit confusing even for myself who had done the subjects at Uni that cover margin ratios etc. I just wonder how normal retail people manage to learn this stuff!
So what are other people's experience in short selling? Do you actually call a special broker and find borrowed shares? Or do you use CFDs? Thoughts?